There has long been a demand for the ability to redeem a presentation instrument at locations other than the issuer of the presentation instrument. (As used herein, the term “presentation instrument” means any type of financial instrument that is drawn by a payor, in favor of a payee, who generally also is the holder of the instrument. Examples of payment instruments include, merely by way of example, many different types of payment draft instruments such as checks, including without limitation, personal checks, business checks, payroll checks, government checks, and the like). For example, the holder of a check drawn by a third party might want to be able to endorse the check and redeem it for cash (an action commonly referred to as “cashing” the check).
Traditionally, the holder of the presentation instrument has been able to redeem a presentation instrument in this manner either at the financial institution from which the instrument was issued, or at a financial institution at which the holder has an account. This limitation on redemption locations produces substantial inconvenience for the holder of the instrument, however. For example, if the holder of a check did not have a deposit account with a financial institution, the holder generally would be limited to redemption of the check at the financial institution from which it was issued, which might be in an inconvenient location for the holder.
To address this need, a variety of different merchants offer redemption (generally referred to herein as “check cashing”) services, in which a holder of a presentation instrument (generally referred to herein as a “check cashing customer” or merely as a “customer”) can redeem (endorse and/or exchange) a presentation instrument for cash, and the merchant will then redeem the instrument at the issuing institution (sometimes through an additional intermediary). Such merchants include, merely by way of example, banks and other financial institutions, grocery stores, money transfer service providers, and dedicated check cashing merchants. Often, a fee will be charged for such services, generally in the form of a deduction from the amount of cash provided in return for the redeemed instrument.
The redemption of presentation instruments provides numerous opportunities for fraud. Merely by way of example, a check-cashing customer might forge a presentation instrument and then attempt to redeem that instrument. As another example, a customer might obtain (through various techniques) a valid presentation instrument written in favor of a different entity and then attempt to redeem the instrument by impersonating that entity. Other possibilities for fraud are possible as well.
Hence, in order to limit the risk of participating in a fraudulent transaction, a merchant must attempt to ensure, first, that the presentation instrument is valid and, second, that the customer is the entity in favor of whom the presentation instrument is written. Various service providers have attempted to fill this need, for example, by verifying the validity of the check. All of these systems, however, presume that the identity of the customer is in fact correct. Through the simple act of assuming a false identity, a check-cashing customer is often able to avoid most, if not all, of the anti-fraud measures implemented by the check cashing service provider.
Hence, there exists in the art a need for tools that provide more robust identity-verification of customers seeking to redeem presentation instruments and/or risk reduction for merchants performing check cashing services.